Sterling Bank to raise N30bn in fresh capital

Sterling Bank Plc says it is planning to raise between $100m (N20bn) and $150m (N30bn) in Tier 2 capital this year to fund its expansion plans.

The Chief Financial Officer, Sterling Bank, Mr. Abubakar Suleiman, who disclosed this at an interactive session with journalists in Lagos, said the move was in line with the expansion targets the lender had unveiled in 2013.

He noted that regulatory headwinds, especially the hike in Cash Reserve Requirements on public sector deposits, had impacted banks’ profitability and restricted their lending capacity to finance economic growth.

The amount of bank deposits that the CBN had sterilised as a result of the 75 per cent CRR on public sector deposits and 20 per cent CRR on private sector deposit, according to Suleiman, is “unprecedented.”

This, he said, had constrained banks’ capacity to lend, noting that the deposit with the CBN was non-earning and would impact on banks’ bottom lines.

The executive director, however, emphasised that despite the tough operating environment, the lender was still committed to meeting its expansion targets.

He said, “We have consistently outperformed our peer group and we will outperform the next group. We want to be there when it comes to service delivery, in terms of compliance to regulations and how we are perceived as good corporate citizens.”

Suleiman added that the financial institution would soon embark on another phase of its growth strategy.

According to him, the bank currently has 1.5 million customers and has been able to achieve over three per cent market share from one per cent a few years ago.

A statement by the bank quoted Suleiman as saying that the lender’s branch network should hit 200 by the end of the year, while the number of Automated Teller Machines should reach 1000.

The bank, he said, would also deploy a new core banking application which would significantly boost the quality of its operations and service delivery.

The Sterling boss denied speculations that the bank would not achieve its capital raising targets this year due to regulatory headwinds.

Suleiman was quoted as saying, “They raised doubts in 2013; they raised doubts in 2014. But what happened? We were successful in our capital raising.

“Their doubts are welcome; it will spur us to work harder and ensure that we achieve our target. But we are confident we will do it. But of course, until it is done, you cannot say you have succeeded. But we know that we will do it.”

The Managing Director and Chief Executive Officer, Sterling Bank, Mr. Yemi Adeola, had told journalists last December that the bank would raise capital this year.

Sterling Bank’s first quarter results for 2015 showed that it recorded a profit after tax of N3.9bn for the period, an increase of 25 per cent from the N3.1bn recorded in the corresponding period of 2014.

Profit before tax also rose by 14.1 per cent from the N3.5bn recorded in the same period last year to N4bn, while non-interest income grew by 31.9 per cent from N6.1bn to N8bn.

Source : Punch

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